Securities market gears up for listing of more SMEs

By James Anyanzwa

The Nairobi Securities Exchange (NSE) is gearing up for a floodgate of Small and Medium-sized Enterprises (SMEs). This is as SMEs seek to raise additional capital or seek more value and liquidity for their shareholders.

Bourse management is bullish that the floating of 405 million shares of Home Afrika, on the Growth Enterprise Market Segment (GEMS is just a tip of the iceberg as more will follow.

The firm — one of the leading real estate developers listed on NSE a fortnight a go. “We expect two more listings within the next nine months,” said NSE Head of Marketing and Product Development Donald Ouma.

The bourse’s GEMS registered its first listing six months after the market segment was launched in January this year.

Ouma said the bourse has since registered 15 Nominated Advisors to fast-track the process of reaching out to clients.

“These are the people who go out there to look for clients. We are optimistic and we anticipate more listings on this market segment,” Ouma told Business Beat last week.

The housing developer became the first company to list on the GEMS and the first real estate company to be listed on the NSE. Nairobi bourse’s GEMS segment was introduced in January 22 to grow companies and enable them access the securities exchange market.

“The NSE congratulates Home Afrika Ltd for successfully listing through this avenue and urges other organisations to take up this opportunity to list on the bourse,” said NSE Chairman Eddy Njoroge.

“This is both a quick and cost effective avenue for companies to come to market and grow their businesses.”

“The GEMS listing requirements act as a floor, with no ceiling on the size of the firm seeking to list,” he added.

cash-call activities

The listing is expected to bolster confidence among the company’s shareholders through regular reporting, disclosure and compliance. The rules form key prerequisites for future successful cash-call activities.

The increasing favour for the GEMS segment has been aided by its less stringent listing requirements.

Compared to NSE’s other segments—Main Investment Market Segment and Alternative Investment Market Segment, the GEMS listing is less tedious.

This makes it appealing to well-run and managed Small and Medium Enterprises that want to raise more capital by accessing capital markets.

The creation of the GEMS was meant to attract more business at the bourse and boost economic activities in the country.

The move is also part of the exchange’s efforts to diversify its revenue streams and allow SMEs raise capital for growth and expansion.

NSE says that a special market division for the SMEs will help them gain access to manage able and affordable capital for growth and expansion. The SMEs market is expected to provide a graduation platform to the main market segment of the bourse. It will also provide investment opportunities to investors.

SMEs have for long been denied affordable credit by banks, which still view them as risky borrowers and often place tight lending requirements before advancing credit.